State Council agencies have canceled or delegated administrative approval powers on 599 items since March 2013, meeting the target to cut the number of items requiring approval by one-third within the term of this government ahead of schedule.”

CHINA’S biggest military shake-up in a generation began with a deliberate echo of Mao Zedong.

Late in 2014 President Xi Jinping went to Gutian, a small town in the south where, 85 years before, Mao had first laid down the doctrine that the People’s Liberation Army (PLA) is the armed force not of the government or the country but of the Communist Party. Mr Xi stressed the same law to the assembled brass: the PLA is still the party’s army; it must uphold its “revolutionary traditions” and maintain absolute loyalty to its political masters. His words were a prelude to sweeping reforms in the PLA that have unfolded in the past month, touching almost every military institution.

The aim of these changes is twofold—to strengthen Mr Xi’s grip on the 2.3m-strong armed forces, which are embarrassingly corrupt at the highest level, and to make the PLA a more effective fighting force, with a leadership structure capable of breaking down the barriers between rival commands that have long hampered its modernisation efforts. It has taken a long time since the meeting in Gutian for these reforms to unfold; but that reflects both their importance and their difficulty.

The PLA itself has long admitted that it is lagging behind. It may have plenty of new weapons—it has just started to build a second aircraft-carrier, for instance—but it is failing to make effective use of them because of outdated systems of command and control. Before any substantial change in this area, however, Mr Xi felt it necessary to strengthen the party’s control over the PLA, lest it resist his reforms and sink back into a morass of money-grubbing.

The reforms therefore begin with the main instrument of party control, the Central Military Commission (CMC), which is chaired by Mr Xi. On January 11th the CMC announced that the PLA’s four headquarters—the organisations responsible for recruiting troops, procuring weapons, providing logistics and ensuring political supervision—had been split up, slimmed down and absorbed into the commission. Once these were among the most powerful organisations in the PLA, operating almost as separate fiefs. Now they have become CMC departments.

Power to the party

The political headquarters was the body through which the party kept an eye on the ranks and ensured they were up to speed on Maoist texts and the party’s latest demands. The loss of its autonomous status may suggest that the party’s role is being downgraded. Far from it. Now the party’s CMC (there is also a state one, which exists only in name) will be better able to keep watch. The body’s 15 new departments will include not only departments for politics but also for logistics, personnel management and fighting corruption. Mr Xi has already turned his guns on graft, imprisoning dozens of generals.

The second reform has been to put the various services on a more equal footing. The land forces have hitherto reigned supreme. That may have been fine when the PLA’s main job was to defend the country against an invasion across its land borders (until the 1980s the Soviet Union was considered the biggest threat). But now China has military ambitions in the South China Sea and beyond, and wants the ability to challenge American naval and air power in the western Pacific. A recent editorial in the Liberation Army Daily, a PLA mouthpiece, berated the armed forces for their “army-centric mindset”.

In addition to those for the navy and air force, a separate command has now been created for the army, which had previously run everything. On December 31st the CMC also announced the formation of a command responsible for space and cyberwarfare, as well as one for ballistic and cruise missiles (previously known as the Second Artillery Force, part of the army). There is also a new joint command with overall control of the various services, a little like America’s joint chiefs of staff.

Big changes are also afoot in regional command structures. China used to be divided into seven military regions. These were powerful and relatively self-contained; sharing or swapping troops and equipment was rare. Now, according to reports in the South China Morning Post, a newspaper in Hong Kong, the number will be reduced to five. Troops will be recruited and trained by the various services before regional deployment. This will ensure greater central control over the regions.

China has been talking about military reform for decades, but change has been glacial. Opposition within the armed forces has been intense. “If [reform] is not done properly,” wrote Sun Kejia and Han Xiao of the PLA National Defence University last month, “it could affect the stability of the armed forces or even all of society.” (The article was promptly removed from the Liberation Army Daily website.) Demobbed soldiers could make trouble—Mr Xi wants the number of troops to be cut by 300,000. State firms have been ordered to reserve 5% of jobs for laid-off veterans.

The recent reforms are more extensive than most Western observers had expected after the Gutian conference. But even so, they are incomplete. The army still holds sway over some appointments (all five chiefs of the new regional commands are army generals, for instance). The PLA has traditionally given higher status to combat units than to those providing communications, logistics, transport and the like, a misplaced emphasis in an age when information and communications are crucial in warfare. The reforms do little to correct that bias. Moreover, many details about them remain unclear. No one knows, for example, where the troop cuts will come from or what units will go into the new space and cyberwarfare command.

The first result of the reforms is likely to be confusion in the ranks, until the new system settles down. Dennis Blasko, an American observer of the PLA, says no one can be sure of the results until they are tested in battle. Amid the murk, only one man clearly seems to have got his way: Mr Xi.

A surprise delay to India’s new goods and services tax (GST) marks one of the most painful setbacks suffered by Prime MinisterNarendra Modi‘s government as it nears the end of a first year in power, with markets falling and farmers braced for a poor monsoon.

Investors had hoped that the ruling Bharatiya Janata Party‘s majority in the Lok Sabha, the lower house of parliament, would ensure Modi could push through reforms far more smoothly, but that assumption has taken a battering.

Late on Tuesday, the government submitted to strong opposition in the Rajya Sabha, the upper house, by agreeing to delay the landmark tax legislation until at least July.

The introduction of the GST would constitute India’s biggest tax reform since independence.

The delay to the bill is a blow to a government that is already dealing with rural discontent over proposed land reforms, which have also still to be sent to the upper house for approval.

The GST would replace a patchwork of levies by the central and state governments, reducing corruption, attracting investment and — according to the finance minister — add 2 percentage points to India’s growth.

Senior officials said on Wednesday they feared the delay could become yet another “sell” signal for foreign funds, already angered by the government seeking to tax them for several years of previously untaxed gains.

“A delay in parliament approval of the GST bill will send a wrong signal to investors, who are already grappling with tax notices,” said one senior government official dealing with economic policy decisions.

India was Asia’s second best performing market last year and the government has scored some successes. It has, for example, improved its finances, held successful telecoms and coal block auctions, and allowed more foreign investment into the insurance and defence sectors.

But the shine has worn off. Foreign investors sold nearly $2.2 billion in shares during the last 16 trading sessions.

China’s top court set a five-year deadline on Thursday for legal reforms to protect the rights of individuals, prevent miscarriages of justice and make its judiciary more professional as the ruling Communist Party seeks to quell public discontent.

A statement on the Supreme Court’s website promised specific deadlines for each goal, including support for a “social atmosphere of justice” by 2018.

It gave more details of a decision reached at a four-day meeting last year, when the party pledged to speed up legislation to fight corruption and make it tougher for officials to exert control over the judiciary.

Despite the legal reforms, Chinese PresidentXi Jinping‘s administration has shown no interest in political change and has detained dozens of dissidents, including lawyers.

China’s top court stressed that one of the five basic principles of legal reform was adhering to the party’s leadership and “ensuring the correct political orientation”.

He Xiaorong, the director of the Supreme People’s Court‘s reform division, said the court “would make officials bear responsibility for dereliction of duty” for cases that have a wide impact.

“Only through the establishment of such a system can we ensure that we can guarantee social fairness and justice in every case,” He told a news conference, according to a transcript on the court’s website.

The measures reflect worries about rising social unrest. Anger over land grabs, corruption and pollution – issues often left unresolved by courts – have resulted in violence between police and residents in recent years, threatening social order.

A bid by Prime Minister Narendra Modi to make it easier for businesses to buy farm land for infrastructure and industry has sparked a backlash that could stymie his efforts to get reforms through a parliament session that began on Monday.

While the change is aimed at unlocking hundreds of billions of dollars worth of projects, which have been stuck for want of land, opposition parties and rights activists say it discriminates against farmers.

Modi issued an ordinance in December to exempt projects in defence, rural electrification, rural housing and industrial corridors from provisions of a law enacted by the previous Congress party government that mandated the consent of 80 percent of affected landowners for any deal.

He had also ended the need for companies to conduct a social impact study of such projects, which would involve public hearings and, industry executives fear, drag on for years.

The ordinance is a temporary order and needs the approval of both houses of parliament to come into force. It will lapse if parliament does not ratify it this session.

China’s leadership unveiled a blueprint for some of the most comprehensive economic and social reforms in nearly 30 years in November 2013.

Implementation since then has been slow but steady. China has eschewed riskier, game-changing reform but the incremental steps aim to reach enough critical mass to sustain momentum and help the world’s second-largest economy shift down fairly smoothly after decades of investment-fueled growth.

The following are some of the significant steps taken since the Communist Party Central Committee’s Nov 9-12 policy conclave:

OCTOBER, 2014

Oct 16 – The top economic planner is considering tightening rules for bond issues, according to traders and a leaked document.

Oct 11 – The State Council says it will institute a resource tax on coal while eliminating other taxes to simplify the tax structure.

Oct 9 – China levies tariffs on coal imports in a move to reduce the country’s dependence on the polluting energy source.

SEPTEMBER, 2014

Sept 9 – Domestic firms in many areas no longer require government approval to invest overseas but must register their investments with authorities starting Oct 6.

Sept 1 – The budget law is revised to allow local governments to issue bonds directly.

Aug 20 – The government cuts taxes on high-tech companies, abolishes the need for firms to seek approvals in 68 further areas and additionally allows lower levels of government to approve business projects in 19 other areas.

Aug 15 – China eliminates 21 approval processes for a list of industries and lower levels of government are given the right to approve certain projects in an effort to cut red tape.

Aug 12 – China will raisenatural gasprices for bulk buyers and non-residential use from Sept. 1 in an effort to reform pricing.

Aug 4 – Foreign firms in China are allowed to use their registered capital to buy stakes in other Chinese companies.

JULY, 2014

July 15 – The state-owned enterprise regulator chooses six state firms to test out reforms expanding the role ofprivate capitalin China’s state sector.

July 14 – China loosens currency controls to make it easier for domestic companies and individuals to set up special purpose vehicles (SPVs) for investments overseas.

July 2 – Banks are allowed to set their own exchange rates forthe yuanagainst the dollar in over-the-counter deals with clients.

JUNE, 2014

June 27 – Regulators lower the threshold for banks to enter the foreign exchange market and removes a layer of approvals.

June 25 – China gives the greenlight to three banks wholly funded with capital from private firms, to be the country’s first private lenders.

MAY, 2014

May 21 – The experiment for China’s first municipal bond market is launched.

May 21 – Private firms are invited to invest in 80 major projects in the energy, information and infrastructure sectors.

May 16 – Financial regulators tighten oversight of interbank loans.

May 16 – China sets up international energy trading center wherecrude oilfutures will be traded for the first time.

May 15 – Securities firms get the go-ahead to expand into new businesses such as the online financial services market.

May 6 – State-owned enterprises to increase dividend payouts by 5 percentage points to up to 25 percent of their profits.

Nov 12 – Anhui province, which spearheaded land reform in 1978 announces pilot land reforms, including accelerating the development of large-scale farming, completing land use rights registration before end-2015 and simplifying land transactions.

After five weeks of staggered voting, more than 550 million ballots cast, and almost $5 billion spent, the world’s largest democracy finally has a new leader. Yet the question that has loomed over India’s long campaign remains: What kind of leader is Narendra Modi going to be?

Modi fought an impressive campaign focused mostly on the right issues. He successfully cast the election as a referendum on who could better deliver jobs, government services, and economic growth: himself or Rahul Gandhi, the ruling Congress party’s heir apparent. The landslide victory of Modi and his Bharatiya Janata Party—the biggest for any party since 1984—testifies to Indians’ hunger for decisiveness and efficiency after years of policy drift and corruption scandals.

Yet voters have little idea how Modi will govern. He has given no sign of how far he’ll challenge his own supporters on economic and social policies. Investors expecting miracles are in for a letdown, because India’s political system is bound to intervene. According to JPMorgan Chase (JPM), about 70 percent to 80 percent of regulatory and other roadblocks impeding big industrial projects aren’t within Modi’s power to remove. Even so, he needs to make progress where he can.

A good place to start would be to keep an election promise to introduce a combined goods and services tax—something Modi’s own party has long opposed, because it would force revenue losses on state governments. (Modi could offset some of the losses using central revenues.) He should move to phase out petroleum subsidies. He should give state and local governments greater flexibility in regulating labor markets, land sales, and more. Economic competition among the states is key.

Above all, India’s new leader must also reach out to the country’s Muslims—assuring them that he recognizes they are full and valued citizens entitled to an equal measure of security, trust, and respect. Modi’s campaign was based in part on a simple point: India can no longer afford to muddle through, endlessly avoiding difficult decisions. Now it’s time to deliver.

A vice-president of China’s fourth largest bank has resigned after he was investigated by the Communist Party’s top discipline body but cleared over suspicions of corruption, Chinese media reported.

Wang Yongli, 50, a vice-president and executive director of the Hong Kong-listed Bank of China, had resigned from the bank effective on Wednesday, the bank said in a statement on Friday night.

Wang, who holds a doctoral degree in economics from China’s Xiamen University, had worked at the bank for 25 years and been vice-president for more than seven. He had been in charge of various key departments within the bank, including finance and IT, before being promoted to vice-president in 2006.

Wang was a hot contender for the bank’s top job when its former president Li Lihui retired at the end of last year, but lost out in the competition to fellow Vice-President Chen Siqing, who was named Bank of China’s president in January this year, reported Beijing-based Caixin magazine.

Caixin cited multiple sources as saying that a “lover” of Wang, who is married, had alerted the Communist Party’s Central Commission for Discipline Inspection to the fact that Wang, a Party member, had maintained multiple extramarital affairs in violation of party discipline.

The anti-corruption body then conducted months of investigation into Wang but found no evidence of “economic problems”, or corrupt behaviour involving money, said Caixin.

Wang was not charged with any crime, but was placed on a two-year probation within the Party as an internal disciplinary measure, it said.

Bank of China was the fourth largest bank in the mainland and 11th in the world with US$2,226 billion in total assets, according to a ranking by SNL Financial in December last year.

Wang is among the latest senior executives at Chinese state-owned firms to be investigated for romantic liaisons.

Thirty-five years ago, when paramount leader Deng Xiaoping launched gaige kaifang, or “reform and opening,” China was a much more agricultural country, with less than a fifth of its people living in cities. Since then hundreds of millions of rural residents have left the countryside, many seeking jobs in the export-oriented factories and construction sites that Deng’s policy promoted.

In 1978 there were no Chinese cities with more than 10 million people and only two with 5 million to 10 million; by 2010, six cities had more than 10 million and 10 had from 5 million to 10 million. By the following year, a majority of Chinese were living in urban areas for the first time in the country’s history.

Now urbanization has been designated a national priority and is expected to occur even more rapidly. On March 16, Premier Li Keqiang’s State Council and the central committee of the Communist Party released the “National New-type Urbanization Plan (2014-2020),” which sets clear targets: By 2020 the country will have 60 percent of its people living in cities, up from 53.7 percent now.

What’s the ultimate aim of creating a much more urban country? Simply put, all those new, more free-spending urbanites are expected to help drive a more vibrant economy, helping wean China off its present reliance on unsustainable investment-heavy growth. “Domestic demand is the fundamental impetus for China’s development, and the greatest potential for expanding domestic demand lies in urbanization,” the plan says.

To get there, China’s policymakers know they have to loosen the restrictive hukou, the household registration policy that today keeps many Chinese migrants second-class urban residents. China will ensure that the proportion of those who live in the cities with full urban hukou, which provides better access to education, health care, and pensions, will rise from last year’s level of 35.7 percent of city dwellers to 45 percent by 2020. That means 100 million rural migrant workers, out of a total 270 million today, will have to be given urban household registration.

To prepare for the new masses, China knows it must vastly expand urban infrastructure. The plan calls for ensuring that expressways and railways link all cities with more than 200,000 people by 2020; high-speed rail is expected to link cities with more than a half million by then. Civil aviation will expand to be available to 90 percent of the population.

Access to affordable housing projects funded by the government is also expected to rise substantially. The target is to provide social housing (roughly analogous to public housing in the U.S.) to 23 percent of the urban populace by 2020; that’s up from an estimated 14.3 percent last year, according to Tao Wang, China economist at UBS Securities (UBS) in Hong Kong. That means providing social housing for an additional 90 million people, amounting to about 30 million units, over the next seven years, Wang writes in a March 18 report.

The urbanization plan appears to face several big challenges. First, the government wants to maintain restrictions on migration to China’s biggest cities, which also happen to be its most popular. Instead, the plan calls for liberalizing migration to small and midsize cities, or those with less than 5 million. Whether migrants will willingly flock to designated smaller cities, rather than the megacities including Beijing, Shanghai, Guangzhou, and Shenzhen, is an unanswered question.

…

Another obstacle to faster urbanization is that the plan doesn’t propose how to reform China’s decades-old land tenure system. Changing the system could allow farmers more freedom to mortgage, rent, or sell their land.

Finally, one of the most daunting problems is figuring out how to pay for implementing the ambitious urbanization targets. The cost of rolling out a much more extensive social welfare network will be substantial (today, most Chinese in the countryside have far lower levels of medical and pension coverage, as well as far inferior schools); building the new urban infrastructure will also be expensive.